Rebar being placed at the location of the new pump at Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012.

Photo: Liz Hafalia, The Chronicle

Rebar being placed at the location of the new pump at Forest Hill...

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Meters will soon be replaced at the Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012.

Photo: Liz Hafalia, The Chronicle

Meters will soon be replaced at the Forest Hill Pump Station in San...

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Rebar being placed at the location of the new pump at Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012.

Photo: Liz Hafalia, The Chronicle

Rebar being placed at the location of the new pump at Forest Hill...

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Lolita Sweet walking on top of one of the water tanks at Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012.

Photo: Liz Hafalia, The Chronicle

Lolita Sweet walking on top of one of the water tanks at Forest...

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Julio working on the rebar which is the location for the new pump at Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012. The local hire law which was put into effect last year requires a percentage of San Franciscans be hired for public works contracts.

Photo: Liz Hafalia, The Chronicle

Julio working on the rebar which is the location for the new pump...

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Rebar being placed at the location of the new pump at Forest Hill Pump Station in San Francisco, Calif., on Monday, March 26, 2012.

Photo: Liz Hafalia, The Chronicle

Rebar being placed at the location of the new pump at Forest Hill...

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Michael Means at the Sprinkler Fitters' Union training center in Hayward, Calif., on Tuesday, March 27, 2012. He is one of 153 people that have gotten jobs through San Francisco's local hire law which requires escalating percentages of the San Franciscans be hired for public works contracts, an idea that has been criticized by unions whose members live outside the city and by others worried it will drive up the cost of construction projects. He's working, but the job he's on right now isn't a city contract, but attributes getting placed with his union to the local hire law because they want to be positioned for upcoming work in the city.

Michael Means was about to abandon his plan for a job in the construction industry a few months ago, but now the 50-year-old Bernal Heights resident credits San Francisco's local hiring ordinance with giving him a career.

Means, who spent 15 years in the Army, had high hopes a year ago when he graduated from a city-sponsored construction training program. San Francisco was implementing a controversial local hiring ordinance that requires an increasing percentage of workers on city-funded construction projects to be residents.

But the jobs didn't come quickly. "I had almost given up," Means said.

Then the sprinkler fitters union called him, looking to place him on jobs, even ones outside the city, to boost its labor pool in anticipation of upcoming San Francisco taxpayer-funded projects, he said.

"It comes back full circle," Means said. "They're looking specifically for San Francisco residents because they need compliance."

Work for people like Means, who is installing sprinklers in Marin County, comes on top of work for 153 San Franciscans who were awarded jobs on taxpayer-funded projects in the city in the first year that the city's local hiring ordinance was in place, according to a report released Tuesday from Mayor Ed Lee's office.

The controversial law, which took affect March 25, 2011, after then Mayor Gavin Newsom refused to sign it but also didn't veto it - unsigned legislation becomes law - has been alternately hailed as a way to put San Franciscans to work with some of the $9.3 billion in city-funded construction projects planned over the next decade or criticized as a mistake that would be expensive to implement and drive up construction costs.

Exceeding targets

The city in general has easily surpassed targets for local hiring at a fraction of the projected administrative costs, according to the report and interviews. Bids for some sewer replacements, repaving and other projects have actually come in under engineering estimates, although not necessarily because of the local hiring law.

"The first year was really a test," Lee said Tuesdayat a park in the Cayuga Terrace neighborhood being rebuilt with workers covered by the law. "We know now that it works, and it can work even better."

Annual thresholds

Under the law, contractors on city-funded construction projects worth $400,000 or more had to hire at least 20 percent of their workers from San Francisco last year and increase that figure by 5 percentage points every year until it hits the 50 percent mark in 2017. The thresholds apply to each of 14 trade categories, like ironworkers or electricians. Contractors who don't meet the requirement will face a fine or have to sponsor apprentices.

The idea is to use existing tax dollars to reduce local unemployment while cycling more money through the local economy.

The overall amount of residents working on city construction projects in the first year was actually 34 percent, according to the report."This is a remarkable achievement," said Supervisor John Avalos, who introduced and championed the legislation before Lee made implementing it one of his first priorities in office. Avalos likened the effort to a local version of the New Deal, President Franklin Roosevelt's use of public works programs to respond to the Great Depression.

Still, none of the projects covered under the law is completed yet, and a clear picture of its effectiveness remains somewhat elusive.

The 20 percent threshold was not met in three of the 14 trade categories measured - asbestos removal workers, drivers and teamsters, and slurry seal workers -although those accounted for less than 7 percent of the total work performed, according to a draft of the report obtained by The Chronicle.

Critics remain

Critics of the program said the first year offers little insight into its overall viability.

"It's really too early to tell," said Assemblyman Jerry Hill, D-San Mateo, who opposed the law over concerns that San Mateo County workers were going to be cut out of projects. Hill said he was optimistic about provisions that count his constituents as local hires for San Francisco-funded projects on the Peninsula, like upgrades to the regional water system, and at San Francisco International Airport.

"You can't declare victory on the basis of 20 percent. That's what we were already doing," Theriault said. "When you push past that is where the difficulty kicks in."

Even the city's report acknowledges "key challenges" this year, with the threshold rising to 25 percent amid questions about whether there will be enough qualified workers for big projects coming online.

Theriault warned that as the requirements increase, demand for local workers could spike, driving up labor costs or pushing contractors to factor fines into their bids, both of which would result in higher costs to taxpayers.

So far, that hasn't materialized, and there are a number of reasons why, including lower material costs and plenty of bidders for projects, City Administrator Naomi Kelly said.

"I don't think there is enough data to say that (local hiring) has brought down costs," said Josh Arce, executive director of Brightline Defense Project, a nonprofit that works to protect poor and minority communities. The organization advocated for the legislation. "There's certainly enough to say that local hire didn't push costs of construction over budget."

Ordinance's 1st year

153 Number of construction jobs that went to San Franciscans

$1,307 to $1,960 Cost per job created

20% Required local hiring threshold for the first year

34% Actual percentage of work that went to San Franciscans

50 Number of projects that fell under the law

$285 million Total contract amount for those projects

22 Number of those projects in which construction has started

$60 million Total contract amount for projects under way

0: Number of projects completed

Sources: Office of Economic and Workforce Development, Supervisor John Avalos